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  • [Prelims Spotlight] Important Financial Institutions in News

    Prelims Spotlight is a part of “Nikaalo Prelims 2020” module. This open crash course for Prelims 2020 has a private telegram group where PDFs and DDS (Daily Doubt Sessions) are being held. Please click here to register.

    Important Financial Institutions in News

    01 May 2020

    Development Finance Institutions

    The Need of DFIs

    Classification of DFIs

    All India DFIs Special DFIs Investment Institutions Refinance Institutions State Level DFIs
    Industrial Finance Corporation of India

    Industrial Development Bank of India

    Small Industries Development Bank of India (SIDBI)

    ICICI

    ICICI ceased to be a DFI and converted into a Bank on 30 March 2002.

    IDBI was converted into a Bank on 11 October 2004.

    		 EXIM Bank

    IFCI Venture Capitalist Fund

    Tourism Finance Corporation of India.

    IDFC.

    		 LIC

    Union Trust of India.

    General Insurance Corporation.

    		 National Housing Board.

    NABARD.

    		 State Financial Corporation.

    State Industrial Development Corporations.

     

    All India Development Finance Institutions

    IFCI ICICI IDBI SIDBI
    IFCI was the first DFI to be setup in 1948. It was setup in January 1995. The IDBI was initially set up as a Subsidiary of the RBI. In February 1976, IDBI was made fully autonomous. SIDBI was setup as a subsidiary of IDBI in 1989.
    With Effect from 1 July 1993, IFCI has been converted into Public Limited Company. With effect from April 2002, ICICI has been converted into a Bank. The IDBI was designated as apex organisation in the field of Development Financing. However, it was converted in a bank wef Oct 2004. The SIDBI was designated as apex organisation in the field of Small Scale Finance.The Union Budget of 1998-99 proposed the delinking of SIDBI from IDBI.
    The key function of IFCI was; granting long-term loans(25 years and above); Guaranteeing rupee loans floated in open markets by industries; Underwriting of shares and debentures; Providing guarantees for industries. The key functions of ICICI were; to provide long term or medium term loans or equity participation; Guaranteeing loans from other private sources; providing consultancy services to industry. The key functions of IDBI were; it provides refinance against loans granted to industries; it subscribed to the share capital and bond issues of other DFIs; it also acted as the coordinator of DFIs at all India level. The key function of SIDBI was; to provide assistance to small scale units; initiating steps for technological up gradation and modernization of SSIs; expanding the marketing channel for the Small Scale Industries product; promotion of employment creating SSIs.
    IFCI was a public sector DFI. The ICICI differed from IFCI and IDBI with respect to ownership, management and lending operation. ICICI was a Private sector DFI. It was a Public sector DFI.

     

    Investment Institutions

    Union Trust of India Life Insurance Company General Insurance Corporation
    The UTI was setup on Nov 1963 after Parliament passed the UTI Act. LIC was set up in 1956 after the insurance business was nationalised. The GIC was formed by the central government in 1971.
    The objective of UTI was to channel the savings of people into equities and corporate debts. The flagship scheme of the UTI was called Unit Scheme 64. The objective of LIC is to provide assistance in the form of term loans; subscription of shares and debentures;resource support to financial institutions and Life insurance coverages. The GIC had four subsidiaries; National Insurance Co; New India Assurance; Oriental Insurance; and United India Insurance.
    In 2002, the Union Cabinet had decided to split UTI into UTI 1 and UTI 2 as a result of the prolonged crisis in UTI. The General Insurance Nationalisation Amendment Act, 2002, has delinked the GIC from its four subsidiaries.

     

    Commercial Banks

    • Organised under the Banking Companies Act, 1956
    • They operate on a commercial basis and its main objective is profit.
    • They have a unified structure and are owned by the government, state, or any private entity.
    • They tend to all sectors ranging from rural to urban
    • These banks do not charge concessional interest rates unless instructed by the RBI
    • Public deposits are the main source of funds for these banks

    What are cooperative banks?

    • Cooperative banks are financial entities set up on a co-operative basis and belonging to their members.
    • This means that the customers of a cooperative bank are also its owners. They are registered under the States Cooperative Societies Act and they come under the RBI regulation under two laws:
    • Banking Regulations Act, 1949
    • Banking Laws (Cooperative Societies) Act, 1955
    • They aim to promote savings and investment habits among people, especially in rural areas.
    • These banks are broadly classified under two categories – Rural and Urban.
    • The rural cooperative credit institutions can be further classified into:
    • Short-term cooperative credit institutions
    • Long-credit institutions

    The short-term credit institutions can further be sub-divided into:

    • State cooperative banks
    • District Central Cooperative banks
    • Primary Agricultural Credit Societies

    Long-term institutions can either be:

    • State Cooperative Agricultural and Rural Development Banks (SCARDBs), or
    • Primary Cooperative Agriculture and Rural Development Banks (PCARDBs)
    • Urban Cooperative Banks (UCBs) can be further classified into scheduled and non-scheduled.
    • The scheduled and unscheduled can either be operating in a single state or multi-state

    Regional Rural Banks (RRBs)

    • RRBs have Scheduled Commercial Banks operating at the regional level in different states of India. They are recognized under the Regional Rural Banks Act, 1976 Act.
    • They have been created with a view of serving primarily the rural areas of India with basic banking and financial services.
    • However, RRBs may have branches set up for urban operations and their area of operation may include urban areas too.
    • The area of operation of RRBs is limited to the area covering one or more districts in the State.

    Their functions

    RRBs also perform a variety of different functions. RRBs perform various functions in the following heads:

    • Providing banking facilities to rural and semi-urban areas
    • Carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pensions etc.
    • Providing Para-Banking facilities like locker facilities, debit and credit cards, mobile banking, internet banking, UPI etc.
    • Small financial banks etc.

    About NABARD

    • NABARD is an apex development financial institution in India, headquartered at Mumbai with regional offices all over India.
    • It is India’s specialised bank in providing credit for Agriculture and Rural Development in India.
    • The Bank has been entrusted with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India”.
    • It was established on the recommendations of B.Sivaraman Committee on 12 July 1982 to implement the NABARD Act 1981.
    • NABARD supervises State Cooperative Banks (StCBs), District Cooperative Central Banks (DCCBs), and Regional Rural Banks (RRBs) and conducts statutory inspections of these banks.

    About National Housing Bank

    • NHB is an All India Financial Institution (AIFl), set up in 1988, under the National Housing Bank Act, 1987.
    • The National Housing Policy, 1988 has envisaged the setting up of NHB as the Apex level institution for housing.
    • It is an apex agency established to operate as a principal agency to promote housing finance institutions both at local and regional levels.
    • It aims to provide financial and other support incidental to such institutions and for matters connected therewith.

    EXIM Bank

    • EXIM stands for Export-Import
    • Export-Import Bank of India is a wholly-owned Govt. of India entity
    • Established in 1982
    • HQ : New Delhi
    • Aim : financing, facilitating and promoting foreign trade of India.
    • The EXIM bank extends Line of Credit (loC) to overseas financial institutions, regional development banks, sovereign governments and other entities abroad.
    • Thus the EXIM Banks enables buyers in those countries to import developmental and infrastructure, equipment’s, goods and services from India on deferred credit terms.
    • The bank also facilitates investment by Indian companies abroad for setting up joint ventures, subsidiaries or overseas acquisitions.

    International Financial Services Centres

    • IFSCs are intended to provide Indian corporates with easier access to global financial markets, and to complement and promote further development of financial markets in India.
    • An IFSC enables bringing back the financial services and transactions that are currently carried out in offshore financial centres by Indian corporate entities and overseas branches/subsidiaries of financial institutions (FIs) to India.
    • This is done by offering business and regulatory environment that is comparable to other leading international financial centres in the world like London and Singapore.
    • The first IFSC in India has been set up at the Gujarat International Finance Tec-City (GIFT City) in Gandhinagar.

    Banks Board Bureau

    • Banks Board Bureau is an autonomous body of Union Government of India
      It is tasked to improve the governance of Public Sector Banks, recommend the selection of chiefs of government-owned banks and financial institutions and to help banks in developing strategies and capital raising plans
    • It will have three ex-officio members and three expert members in addition to Chairman
    • Financial services secretary, deputy governor of the Reserve Bank of India and secretary- public enterprises are BBB’s ex-officio members

    Non-Banking Financial Companies

    • A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.
    • A non-banking institution which is a company and has a principal business of receiving deposits under any scheme or arrangement in one lump sum or in instalments by way of contributions or in any other manner is also a non-banking financial company (Residuary non-banking company).

    NBFCs are doing functions similar to banks. What is the difference between banks & NBFCs?

    NBFCs lend and make investments, and hence their activities are akin to that of banks; however, there are a few differences as given below:

    1. NBFC cannot accept demand deposits;
    2. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.
    3. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.
    4. Unlike Banks which are regulated by the RBI, the NBFCs are regulated by multiple regulators; Insurance Companies- IRDA, Merchant Banks- SEBI, Micro Finance Institutions- State Government, RBI and NABARD.
    5. The norm of Public Sector Lending does not apply to NBFCs.
    6. The Cash Reserve Requirement also does not apply to NBFCs.

    Classification and Categorization of NBFCs

    Asset Finance Company AN AFC is a company which is a financial institution whose principle business is the financing of physical assets such as automobiles, tractors, machines etc.
    Investment Company AN IC is any company which is a financial institution carrying on its principle business of acquisitions of securities.
    Loan Company LC is a financial institution whose primary business is of providing finance by making loans and advances.
    Infrastructure Finance Company IFC is an NBFC which deploys 75% of its total assets in infrastructure loans and has a minimum net owned fund of Re 300 Crore.
    Systematically Important Core Investment Company CIC is an NBFC carrying on the business of acquisition of shares and securities. CIC must satisfy the following conditions:It holds not less than 90% of its Total Assets in the form of investment in equity shares, preference shares, debt or loans in group companies;

    Its investments in the equity shares (including instruments compulsorily convertible into equity shares within a period not exceeding 10 years from the date of issue) in group companies constitutes not less than 60% of its Total Assets;

    (c) it does not trade in its investments in shares, debt or loans in group companies except through block sale for the purpose of dilution or disinvestment;

    (d) it does not carry on any other financial activity referred to in Section 45I(c) and 45I(f) of the RBI Act, 1934 except investment in bank deposits, money market instruments, government securities, loans to and investments in debt issuances of group companies or guarantees issued on behalf of group companies.

    (e) Its asset size is ₹ 100 crore or above and

    (f) It accepts public funds
    Infrastructure Debt Fund NBFC IDF NBFC primary role is to facilitate long term flow of debt into infrastructure projects. Only Infrastructure Finance Companies can sponsor IDF.
    Micro Finance NBFC MFI NBFC is a non-deposit taking NBFC having not less than 85% of its assets in the nature of qualifying assets which satisfy the following criteria:a) loan disbursed by a NBFC-MFI to a borrower with a rural household annual income not exceeding ₹ 1,00,000 or urban and semi-urban household income not exceeding ₹ 1,60,000;

    b. loan amount does not exceed 50,000 in the first cycle and 1,00,000 in subsequent cycles;

    c. total indebtedness of the borrower does not exceed 1,00,000;

    d. tenure of the loan not to be less than 24 months for the loan amount in excess of 15,000 with prepayment without penalty;

    e. loan to be extended without collateral;

    f. aggregate amount of loans, given for income generation, is not less than 50 per cent of the total loans given by the MFIs;

    g. loan is repayable on weekly, fortnightly or monthly instalments at the choice of the borrower

     

     

  • Afghan peace and India’s elbow room

    The article discusses India’s exclusion from the Afghan peace process. As India seeks to fight back its exclusion there are certain issues that need to be addressed. India’s reluctance to enter into talks with the Taliban in one such issue, which needs a rethink. And there are several areas in which India needs to continue working like-the goodwill in Afghanistan, participation in assistance work, bringing together the major leaders in that country.

    India left out of the meeting on peace in Afghanistan

    • Earlier this month, the United Nations Secretariat held a meeting of what it calls the “6+2+1” group on regional efforts to support peace in Afghanistan.
    • The group includes six neighbouring countries: China, Iran, Pakistan, Tajikistan, Turkmenistan and Uzbekistan; global players the United States and Russia, and Afghanistan itself.
    • India was conspicuous by its absence from the meeting on April 16, given its historical and strategic ties with Afghanistan.
    • This has not happened for the first time, India was left out form talks similarly in 2001 and 2010.
    • In both 2001 and 2010, however, India fought back its exclusion
    • At the Bonn agreement of 2010, India played a major role in Northern Alliance accepting Hamid Karzai as the Chairman of the interim arrangement that replaced the Taliban regime.
    • After the 2010 conference, New Delhi redoubled its efforts with Kabul, and in 2011 India signed the historic Strategic Partnership Agreement, which was Afghanistan’s first such agreement with any country.

    Reasons for not inviting India

    • In 2020, the reason given for keeping India out of regional discussions on Afghanistan was ostensibly that it holds no “boundary” with Afghanistan.
    • But in fact, it is because New Delhi has never announced its support for the U.S.-Taliban peace process.
    • As planners in South Block now consider their next steps in Afghanistan, they must fight back against the idea that any lasting solution in Afghanistan can be discussed without India in the room, while also studying the reasons for such exclusions.

    Following are the issues that Indian must consider and act on as it seeks to fight back its exclusion from the peace talks.

    India’s position on Afghan-led peace process and reality

    • India’s resistance to publicly talking to the Taliban has made it an awkward interlocutor at any table.
    • Its position that only an Afghan-led, Afghan-owned, and Afghan-controlled process can be allowed is a principled one but has no takers.
    • The Ashraf Ghani government does not lead, own or control the reconciliation process today, comprising the U.S.-Taliban negotiation for an American troops withdrawal, and intra-Afghan talks on power-sharing.
    • The U.S.-Taliban peace deal means that the Taliban, will become more potent as the U.S. withdraws soldiers from the country.
    • Taliban will hold more sway in the inter-Afghan process as well, as the U.S. withdraws funding for the government in Kabul.

    Two effects of India’s position

    • New Delhi’s decision to put all its eggs in the Ghani basket has had a two-fold effect:
    • 1) Its voice in the reconciliation process has been limited.
    • 2) It has weakened India’s position with other leaders of the deeply divided democratic setup in Kabul such as the former chief executive Abdullah Abdullah.

    India should not let its diplomatic strength weaken

    • India painstakingly built up its presence inside Afghanistan since 2001.
    • This presence is being threatened anew by terror groups such as the Islamic State Khorasan Province (ISKP).
    • ISKP is believed to be backed by Pakistan’s establishment.
    • Intercepts showed that the brutal attack, in March, that killed 25 at a gurudwara in Kabul was meant for the embassy in Kabul.
    • The government cleared out both of its consulates this month.
    • While the government has said that the novel coronavirus pandemic prompted its decision to clear out both consulates.
    • The truth is that a full security reassessment is under way for them.
    • Either way, India’s diplomatic strength in Afghanistan should not appear to be in retreat just when it is needed the most.

    Goodwill in Afghanistan and damage caused due to CAA

    • The government must also consider the damage done to the vast reservoir of goodwill India enjoys in Afghanistan because of recent events in the country, especially the controversy over the Citizenship (Amendment) Act.
    • The building blocks of that goodwill are India’s assistance in infrastructure projects, health care, education, trade and food security, and also in the liberal access to Afghans to study, train and work in India.
    • Above all, it is India’s example as a pluralistic, inclusive democracy that inspires many.
    • Afghanistan’s majority-Muslim citizens have felt cut out of the move to offer fast track citizenship to only Afghan minorities.
    • The damage was also done by reports of anti-Muslim rhetoric and incidents of violence in India.

    Regain upper hand in the narrative in Afghanistan

    • While many of these are problems of perception, New Delhi must move swiftly to regain the upper hand in the narrative in Afghanistan.
    • India has provided the assistance of more than $3 billion in projects.
    • Bilateral trade is about $1 billion.
    • A $20 billion projected development expenditure of an alternate route through Chabahar.
    • And support to the Afghan National Army, bureaucrats, doctors and other professionals for training in India should assure it a leading position in Afghanistan’s regional formulation.
    • Three major projects along with hundreds of small development projects (of schools, hospitals and water projects) have cemented that position in Afghan hearts nationwide, regardless of Pakistan’s attempts to undermine that position, particularly in the South.
    • The three major projects include 1) the Afghan Parliament, 2) the Zaranj-Delaram Highway, 3)the Afghanistan-India Friendship Dam (Salma dam).

     Pursue opportunities to fulfil its role in the peace efforts

    • India must also pursue opportunities to fulfil its role in the peace efforts in Afghanistan, starting with efforts to bridge the Ghani-Abdullah divide.
    • India could also play role in bringing together other major leaders with whom India has built ties for decades.
    • It would be an utter tragedy if the Taliban were to enter the government in Kabul as the U.S. deal envisages, to find the opposing front collapse as it did in 1996.
    • An understanding between Iran and the U.S. on Afghanistan is necessary for a lasting peace as well, and India could play a mediatory part, as it did in order for the Chabahar project.

    Return of the Taliban has several implications for India. In 2013, the UPSC asked a question related to developments in Afghanistan against the backdrop of the proposed withdrawal of the International Security Assistance Force. Similarly, a question based on the latest development can be asked, for ex-“The return of Taliban after the US-Taliban deal in Afghanistan is fraught with major security implications for the countries in the region. Examine in the light of the fact that India is faced with a plethora of challenges and needs to safeguard its own strategic interests.”

    Use UN call for peace to put hostilities with Pakistan on hold

    • Finally, New Delhi should use the United Nations’s call for a pause in conflicts during the novel coronavirus pandemic, to ensure a hold on hostilities with Pakistan.
    • This will be even more difficult than it sounds given the abyss that bilateral relations have fallen into in the past year over Kashmir.

    Conclusion

    It would be a mistake, at this point, to tie all India’s support in only to Kabul or the Ghani government; the government must strive to endure that its aid and assistance is broad-based, particularly during the novel coronavirus pandemic to centres outside the capital, even if some lie in areas held by the Taliban.

  • 30 April 2020 | Nikaalo Prelims Quiz -Art and Culture Test 3

    [WpProQuiz 428]

  • It is time to design clear rules for departure from accepted norms of fiscal prudence

    This editorial spells out the size of the stimulus package that would be required to restart the economy. It also discusses the possible sources that the government could tap to raise the revenue. Such huge expenditure is likely to result in the huge fiscal deficit which would necessitate that the stimulus is time-bound and transparent.

    Prospects of substantially negative growth

    • Arvind Subramanian has likened the current economic situation to a “pralay (deluge)”.
    • A deluge in which the government should spend more than even what it ought to in a rainy day.
    • India, the former chief economic adviser said that India must plan for a “substantially negative” growth this year that might require an additional fiscal expenditure of Rs 10 lakh crore.
    • Corporate indebtedness was already high before the lockdown.
    • Insolvency cases will mount further.
    • Even companies facing no significant cash flow issues wouldn’t invest in uncertain public health as well as the demand-constrained environment.
    • Banks, too, aren’t going to lend, no matter how much liquidity the Reserve Bank of India (RBI) may infuse.
    • The burden of non-performing assets, which is set to get heavier in the coming months, makes it impossible for them to finance an economic recovery.
    • Last, but not the least, are faced with layoffs and pay cuts, they would rather save and will be afraid to spend.

    Importance of government spending in the current situation

    • Under the circumstances, the onus for ensuring that the wheels of the economy start moving lies on the government.
    • There’s no guarantee of it happening even with all lockdown restrictions being lifted.
    • Without somebody to spend, the economy is in real danger of contraction, which will, in turn, worsen the problem of businesses going bust, joblessness and loan defaults that can spread to the entire financial services industry.

    No “3F” constraints and risk of deflationary shocks

    • The one consolation today is that India is not saddled with its traditional “3F” constraints — food, fuel and foreign exchange — which were triggers for inflation and balance of payments crises.
    • On the contrary, public foodgrain stocks are at an all-time high, global oil prices have crashed and there is no run on the rupee, unlike during the “taper tantrum” period of May-August 2013.
    • Risk of deflationary shock: The risks, if at all, are tilted more towards demand-side “deflationary shocks” than supply-side inflation concerns.

    How will the government manage the resources?

    • The finances of both the Centre and states are in a mess, with receipts from tax and non-tax sources hardly covering even existing expenditures.
    • But governments enjoy sovereign borrowing powers that allow fund-raising at rates below that of triple A-rated instruments issued by private corporates, more so in the present risk-averse scenario.
    • Also, there is the option of deficit financing (“printing money”) through the RBI subscribing to primary auctions of government securities.
    • There are, of course, costs in such powers being exercised.
    • Past precedents — whether the issuance of ad hoc Treasury Bills to the RBI prior to April 1997 or the stimulus package post the 2008 global financial crisis — do not inspire confidence.

    A question based on the stimulus package and its consequences can be framed, for ex- “Do you agree with the view that a stimulus package by the government to restart the economy is necessary? What are the options with the government to raise the money for such a package? What could the consequences of such a package on the economy in the future?”

    Conclusion

    This is the time to design clear rules for departure from accepted norms of fiscal prudence. Any stimulus has to be transparent and time-bound.

  • Ease legal constraints on fiscal expenditure

    The article discusses the two legal provisions that need to be changed in order to provide a fiscal stimulus of the size that could save the economy from collapse. Other major concern after the package would be the inflationary pressure resulting from government spending.

    The urgency of the fiscal package by the Centre

    • The longer the Centre dithers over a big-bang fiscal package to counter the adverse economic fallout of covid-19, the closer it risks pushing India’s economy to the precipice of disaster.
    • The nationwide lockdown has more or less paralysed commercial activity, our exit path looks dreadfully long-winded, and the distress being seen right now could just be an early sign of what is to come.
    • The suffering of citizens will likely expand once the shutdown’s second-order effects, which operate with a lag, begin to kick in.
    • Estimates of ₹10 trillion needed by way of fiscal relief, once seen as too much by some, could yet turn out to be too little.
    • Either way, preparatory work in terms of legal enablers should be done alongside the arithmetic

    Legal constraints in the way of the stimulus programme

    • There are two major constraints that we need to be relieved of—if only temporarily—for a stimulus programme to take shape.
    • The first is the Fiscal Responsibility and Budget Management (FRBM) Act of 2003.
    • And the second is the amendment done in 2016 of the Reserve Bank of India Act to give legislative cover to a flexible inflation-targeting framework that set our central bank the task of keeping India’s retail price index within a certain band.
    • Both of these were aimed at long-term economic stability but made no allowance for a robust fiscal response to the kind of crisis we now face.
    • It would be best if these were tweaked appropriately by a special session of Parliament.
    • If not, then ordinances should be issued to suspend specific restrictions for a while.

    Projections of fiscal deficit

    • Under the budget presented in February, the Centre’s fiscal deficit for 2020-21 was projected at 3.5% of gross domestic product (GDP).
    • This included a half percentage point deviation from the FRBM glide path allowed by the law’s contingency clause.
    • Total expenditure was placed at a little over ₹30.4 trillion, and receipts at ₹22.4 trillion-plus.
    • With tax revenues and asset-sale realizations expected to fall short, the fiscal gap could widen to about ₹10 trillion even without any extra spending.
    • Drastic cuts in expenditure could save some money, but even if a heavy axe is wielded on expenses, the government’s deficit this year would have to exceed twice the legal limit for a stimulus that saves the economy from collapse.
    • If this turns out to be a year of negative growth, as some fear, effecting a revival will only get harder.
    • For pre-emptive action, the government should use its parliamentary clout to permit a limitless deficit for 2020-21.

    A question based on the limits placed by the FRBM Act and the changes brought by the amendment to the RBI Act which mandated RBI with managing the inflation could be asked by the UPSC.

    Prospects of inflationary pressure and RBI’s mandate

    • An effort to spend our way out of an economic morass could prove inflationary if too much cash ends up chasing too few goods and services.
    • As we have undergone both demand and supply shocks, opinion is divided on whether prices will go haywire.
    • This risk would depend on how much cash gets pumped around at what point in time and the pace at which supplies are restored.
    • In other words, the inflation outlook is highly uncertain.
    • But should prices threaten to rise, it would be counterproductive of the central bank to tamp them down by tightening credit.
    • As of now, RBI’s mandate is to keep inflation at 4%, with a tolerance band of 2% on either side.
    • This target is valid till March 2021, but needs to be reviewed right away to let the central bank focus on growth.
    • The acceptable range could be widened and the time limit to achieve the goal lengthened as a special reprieve.

    Conclusion

    A few tweaks of the law must go alongside calculations of a stimulus package designed to relieve economic distress. The government should act on these quickly to save the day.

  • Spanish Plan for Phased Easing of Lockdown

    • Spain’s Prime Minister has presented a four-phase lockdown exit strategy for the country.
    • It’s imperative for India to learn from global examples for easing lockdown without doing away with health concerns.

    With the nearing end of nationwide lockdown, various exit strategies are being discussed for a smooth restart.

    Spain’s exit strategy

    • The opening up of the lockdown will begin with phase 0 throughout Spain, except for a few islands that will already be in phase 1 by then.
    • A week later, provinces will enter phase 1, which will last for two weeks and the remaining phases will also last for two weeks each.
    • In total, the de-escalation will take at least six weeks to be complete.

    Phase 0: The preparation phase

    • De-escalations in this phase include opening up of takeaway facilities at restaurants and opening up of some other establishments such as hair salons.
    • From May 2, individuals will be able to go out for a walk or to exercise alone or with people they stay with. In this phase, professional athletes will be able to access individual training sessions.
    • Children aged 14 years or younger have been allowed to go out for walks from April 26.

    Phase 1: The initial phase

    • Begins on May 11. Small businesses will be allowed to open under strict security measures.
    • For instance, gyms can open for people who want to train individually and by appointment.
    • Further, hotels and tourist accommodations will be allowed to open, excluding the common areas and with certain restrictions in place.
    • Places of worship will also be allowed to open, limiting their capacity to one-third. Owners of terrace bars can open their establishments but with 30 per cent capacity.
    • In this phase, some degree of social contact with a limited number of people may also be allowed, subject to what the conditions are then.

    Phase 2: The intermediate phase

    • Begins on May 25.Will include the resumption of hunting and sport fishing, and the opening of cinemas and auditorium theatres at one-third of their capacity.
    • Visits to monuments and cultural facilities, such as exhibition halls and conference rooms, will resume with one-third occupancy.
    • Cultural shows will be allowed with less than 50 people in closed spaces. In the outdoors, shows and events can be held with less than 400 people provided they are seated.
    • All places of worship will have to limit their capacity to 50 per cent.

    Phase 3: The advanced phase

    • Begins on June 8 and provided the situation is under control, general mobility will be made more flexible.
    • Wearing masks will be recommended when people venture outside, especially on public transport. In commercial settings, capacities will be restricted to 50 per cent.
    • Beaches may also open in this phase. The movement of people into other provinces or islands is restricted until the de-escalation process is complete.

  • Ganga water improves during lockdown

    The Ganga water quality has improved remarkably during the lockdown period. This highlights the importance of synergy for absolute symbiosis between nature and man as the need of the hour.

    Context

    • The novel coronavirus lockdown (COVID-19) pandemic has put millions in the throes of adversity — and yet, there is a reason to celebrate.
    • Over a month into the nationwide lockdown, air and water pollution levels have shrunk and the wildlife is free.
    • Of 36 monitoring units placed in the Ganga, water quality at 27 points was found suitable for bathing and propagation of wildlife and fisheries in the lockdown period

    Status of rivers in India

    • India’s water bodies are in a poor state. The rivers are becoming dumpyard for untreated sewage and industrial waste.
    • In the name of economic growth, most rivers and streams have been turned into sewer canals and are getting difficult to be treated.
    • It is estimated that every day, almost 40 million litres of wastewater enters rivers and other water bodies; only 37 per cent is adequately treated.
    • A Centre Pollution Control Board (CPCB) report showed that critically polluted river stretches in the country have increased from 302 stretches in 2016 to 351 stretches in 2018.
    • The finding was based on Biological Oxygen Demand (BOD).

    Ganga

    • According to CPCB, more than half of wastewater treatment plants in the basin do not comply with the discharge norms.
    • Since 1985, several programmes and schemes have been launched to clean the Ganga. It began with the Ganga Action Plan I, followed by Ganga Action Plan II.

    • In 2015, the biggest-ever initiative, Namami Gange was launched with a budget of over Rs 20,000.
    • Despite numerous programmes and huge funds, the Ganga still runs polluted.

    The causes

    • More than 80 per cent of pollution in the Ganga is due to domestic sewage from surrounding towns and villages. The rest is contributed by industrial waste.
    • During the lockdown, domestic sewage would have increased owing to increased demand for water to maintain hand-washing hygiene. Industrial waste, however, stopped entering the Ganga.
    • Other activities such as tourism, fairs, bathing and cloth washing near the ghats were curtailed. Experts said these observations reflected that domestic sewerage was not the only cause of concern.
    • When sewage is mixed with industrial effluents, it gets difficult for the river to assimilate pollution.
    • One more reason was high number of western disturbances which brought rain and improved the flow in the river leading to dilution.

    COVID-19’s gift to Ganga

    • After the nationwide lockdown was imposed, within 10 days signs of improvement in water quality started surfacing.
    • At Varanasi’s Nagwa Nala, the Dissolved Oxygen (DO) values were found increased to 6.8 milligram/litre against 3.8 mg/l on March 6, showcasing an extraordinary improvement of 79 per cent in DO values.
    • 30 per cent of the total BOD load was due to industries along the river, which amounted to 130-150 tons per day.
    • Since all major polluting industries are closed, the toxic load is off the river.

    Surprisingly better

    • Ganga water at Haridwar and Rishikesh was reported fit for drinking due to 500 per cent decrease in sewage and industrial effluents.
    • A dip in the number of visitors at ghats in Haridwar also helped the river water quality.
    • The Ganga water has become fit for ‘achaman’, which means ritual sipping, after a long time.

    Bringing the ambitions to reality

    There is an urgent need to:

    • Reinvestigate the main source of pollution in Ganga and reorient all river cleaning policies and programmes based on lockdown findings.
    • Industries need to strictly adhere to discharge norms accompanied with strong enforcement of laws and regulations vis-a-vis strong monitoring and vigilance framework.
    • Setting up of effective interventions to clean rivers, reliable, representative and comprehensive data collected at high frequency in a disaggregated manner.
    • There is an urgent need to expand the network of monitoring stations on the Ganga, the Yamuna and tributaries of Ganga in more places.
    • Over-extraction and over-exploitation of Ganga’s waters have rendered long stretches of the river completely dry for much of the year. There is a need to maintain ecological flow to keep it clean for longer run.
    • Education and awareness needs to be carried out strategically.

    Back2Basics: Biochemical Oxygen Demand

    • BOD is the amount of dissolved oxygen needed (i.e. demanded) by aerobic biological organisms to break down organic material present in a given water sample at certain temperature over a specific time period.
    • The BOD value is most commonly expressed in milligrams of oxygen consumed per litre of sample during 5 days of incubation at 20 °C and is often used as a surrogate of the degree of organic pollution of water.
    • BOD is similar in function to chemical oxygen demand (COD), in that both measure the amount of organic compounds in water.
    • However, COD is less specific, since it measures everything that can be chemically oxidized, rather than just levels of biodegradable organic matter.

  • Religious Freedom and India

    The U.S. Commission on International Religious Freedom (USCIRF) has downgraded India to the lowest ranking, “countries of particular concern” (CPC) in its 2020 report.

    Religious freedom in India has been a contested issue since decades. Recent moves by the govt. since the abrogation of Art. 370 which triggered the riots in Delhi has left a big scar on the secular fabric of India.

    About USCIRF

    • It is a U.S. federal government commission created by the International Religious Freedom Act (IRFA) of 1998.
    • Its principal responsibilities are to review the facts and circumstances of violations of religious freedom internationally.

    Accusing India of religious intolerance

    • USCIRF has placed India alongside China, North Korea, Saudi Arabia and Pakistan.
    • India was categorised as a “Tier 2 country” in last year’s listing.
    • This is the first time since 2004 that India has been placed in the CPC category.
    • The commission also recommended that the U.S. government take stringent action against India under the “International Religious Freedom Act” (IRFA).

    What led India to lower its religious freedom?

    • India took a sharp downward turn in 2019 due to concerns about the Citizenship Amendment Act, the proposed National Register for Citizens, anti-conversion laws and the situation in Jammu and Kashmir.
    • The report accuses India using its strengthened parliamentary majority to institute national-level policies violating religious freedom across India.
    • The panel reported harassment and violence against religious minorities to continue with impunity, and engaged in and tolerated hate speech and incitement to violence against them.

    India’s reaction

    • The Centre reacted sharply to the USCIRF report terming it “biased and tendentious” and rejected its observations.
    • The biased and tendentious comments against India are not new. But on this occasion, its misrepresentation has reached new levels.
    • Major panellists of USCIRF dissented with the recommendation on India as being ‘too harsh’ and that ended up placing the country alongside what they termed as “rogue nations” like China and North Korea.
    • India regards the accusations as inaccurate and unwarranted and questioned the body’s “locus standi” in India’s internal affairs.

    US’s religious activism: Unwelcomed by all

    • The US earlier this month has announced the launch of a 27-nation International Religious Freedom Alliance, which aim to adopt a collective approach in protecting and preserving religious freedom across the world.
    • Among the prominent countries to join the alliance are Brazil, the United Kingdom, Israel, Ukraine, the Netherlands and Greece.
    • The USCIRF has been accused worldwide of being biased towards focusing on the persecution of Christians and of being anti-Muslim & Hinduphobic. It panels various controversial personalities.

  • [pib] Petersberg Climate Dialogue

    India along with 30 countries deliberated on issues of Climate Change in first-ever virtual Petersberg Climate Dialogue.

    Climate change negotiations are somehow put to a halt due to ongoing pandemic. Such small dialogues are keeping alive the spirit of climate action.

    Petersberg Climate Dialogue

    • It has been hosted by Germany since 2010 to provide a forum for informal high-level political discussions, focusing both on international climate negotiations and the advancement of climate action.
    • This year’s virtual Dialogue was co-chaired by Germany and the UK.
    • The dialogue was crucial because of the efforts to contain coronavirus as well as countries preparing to move into the implementation phase of the Paris Agreement 2015 in the post-2020 period.

    India’s Contributions

    • Expressing solidarity with the world as it combats the COVID 19 pandemic the Union Minister highlighted how COVID – 19 has noticed that we can survive on less.
    • India pushed for having climate technology as an open source available to all countries at affordable prices.
    • India stressed on climate finance and urged to plan for 1 trillion USD in grants to the developing world immediately.
    • India focussed on the opportunity that the world has today to accelerate renewable energy deployment and creating new green jobs in the renewable energy and energy efficiency sector.

  • [pib] HCARD robot to assist frontline COVID-19 healthcare warriors

    HCARD, a robot, to assist frontline COVID-19 healthcare warriors has been developed by a CSIR lab.

    It is very unlikely to create a prelim question on HCARD. However, developments as such help in exemplifying the scientific developments which helped contain such highly contagious outbreaks.

    What is HCARD?

    • The robotic device HCARD, an acronym for Hospital Care Assistive Robotic Device, can help frontline healthcare workers in maintaining physical distance from those infected by the coronavirus.
    • The device is equipped with various state-of-the-art technologies and works both in automatic as well as manual modes of navigation.
    • This robot can be controlled and monitored by a nursing booth with a control station having such features as navigation, drawer activation for providing medicines and food to patients, sample collection and audio-visual communication.
    • The cost of this device is less than Rs 5 lakh and the weight is less than 80 kilograms.

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